How to Draw Gold Trading Fib Extension on Downward Gold Trend
Drawing Fibonacci Extension Levels on a Downwards Gold Trend
We draw the Fibo Extension indicator tool from chart point 1 to chart point 2 to chart point 3 as displayed on the xauusd example illustrated & explained below. Remember we always draw this Fibonacci Extension tool in the direction of the trend. In the Fibonacci Extension example illustrated and explained below, can you figure what direction we have drawn it? That's right - downward direction.
As a trader you would also have used Fibonacci Extension level 100.00%, just where the price reached as illustrated on the Fibonacci Extension example illustrated and explained below. That would have been a good take profit area.
How to Draw Gold Trading Fib Extension on Downward Gold Trend
From the Fibo Extension indicator tool examples above, after drawing this Fibonacci Extension indicator tool there are 2 levels that are used to show the profit taking levels, these two Fibo Extension areas are drawn as horizontal lines across the gold chart marked as 61.8% XAUUSD Trading Fib Extension Level & 100% Fibo Extension Level.
Explanation of How to Draw Fibonacci Extension Levels on Gold Charts
We use Fibonacci Extension Zones to estimate where the trend movement will reach. There are 2 oftenly used Fibo Extension levels: 61.80% Fibonacci Extension Level and 100% Fibo Extension Levels, these are used for setting taking profit levels.
To draw Fibo Extension levels on the gold chart we wait until the xauusd price retracement is complete & the price starts to move in original direction of the Gold trend. Where the xauusd price retracement reaches is used as chart point 3. Fibonacci Extension Indicator tool is drawn using three chart points as shown on the xauusd examples illustrated & explained below of how to draw the Fib Extension Technical Indicator Tool.
The Fibonacci Extension examples described below shows the 3 Chart Points where the Fibo Extension technical indicator is drawn, marked as Chart point 1, Chart point 2 and Chart point 3.
Chart point 1 is where the gold trend started, Chart point 2 is where the gold trend pulled back & retraced and Chart point 3 is where the gold retracement reached as displayed on the Fibonacci Extension Technical Indicator Tool example illustrated and explained below.
How to Draw Fib Extension Indicator on Downwards Gold Trend
Please note where these Fibo Extension levels are drawn - Fibo Extension zones are plotted above the Fibo technical indicator, these are chart points where a trader will place take profit orders using these Fibo Extension Levels - 61.8% Fibonacci Extension Level and 100.0% Fibonacci Extension Level.
